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Starting a Micro Business:

Everything You Need to Know

What’s bigger than a side hustle but smaller than a small business? Ta-dah! A micro business. These are becoming more and more popular among entrepreneurs and it’s easy to see why. It doesn’t have to be world changing but if you’ve been itching to start a micro business of your own, here's how to do it right.

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Starting a



The Advantages of Starting a


Being a micro entrepreneur means you control your own schedule. Get a sudden burst of inspiration at midnight for that new design project? Want to take the day off to catch up on household tasks? The only person you report to is yourself.

Unique business

Micro business decisions are left up to the owner and sometimes a small number of employees, meaning you create the unique business of your dreams or serve niche markets that larger organizations can’t.

Low Start-up Costs

Micro businesses are, well, micro. This means that they require little money to get started, and there aren’t hefty expenses for employees, operations, and office space.


With fewer people to manage, running a micro business offers simplicity that small or large companies don’t. Of course, there will still be challenges, but overall operations will be much easier with a micro business.

The Disadvantages of Starting
aMicro Business

No Brand Recognition

At first, it may be challenging to attract customers because your business doesn’t have the same brand recognition and credibility as bigger names in the industry.


If you’re planning on funding the microbusiness yourself, saving start-up costs can be difficult and take a long time.

Pricing Limitations

Micro businesses may not be able to set prices that beat larger businesses and may be less equipped to handle seasonal dips in sales or periods of high demand.

Limited Resources

Bringing on new employees or buying new technology can be a challenge for microenterprises because you may not have as many resources as larger businesses out there.

How to Start a Micro Business

Here are the 9 easy steps to starting a micro business:


Choose a business concept

Think about your hobbies and interests. Can you turn any of those into a money-making micro enterprise? Among the various options available today, you can easily spot something that suits your skillset, personality, and the lifestyle you already have or desire.


Name your business

Your business needs a good, unique name. If you already have one, use this business name search to make sure it isn’t already taken. Don’t have any ideas? Don’t worry, our Business Name Generator can help you come up with a great one.


Create a business plan

Business plans typically include details about your business model, target markets, marketing plan, business goals, location, financing, operations, and hiring. A business plan will help you market your micro business, obtain funding, make profits, and grow.


Choose the right micro business structure

Many micro entrepreneurs operate as sole proprietors to avoid the business fees and paperwork required to form an official business entity. But, by incorporating as an LLC (Bizee can help you do this for $0!) when you’re ready, you’ll have extra protection for your personal assets while still avoiding the complexity and regulations of a corporation.


File the correct formation paperwork with your state

Each state has different requirements for the paperwork and costs required to start an LLC. Services like Bizee can help you do this for free. Once you file the formation paperwork, it can take a few weeks to form the business legally. Still, this step is necessary before moving on to the other business formation tasks below.


Apply for an Employer Identification Number (EIN)

Once your micro business is legally formed, apply for an EIN with the IRS. An EIN is basically like a Social Security Number for your business and will allow you to open a business bank account, pay employees, and file taxes.


Secure financing

Once you have an EIN, open a business bank account, research business credit cards to find the right one for your needs, and look into microloans if you need more capital to get started.



Congrats! You started a business. Now it’s time to get to work.


Maintain your micro business

To keep your micro business in good standing, file any annual reports your state requires, pay your quarterly estimated taxes, renew business licenses and permits as necessary, and file annual taxes each year.

How to Get


for Your



Frequently Asked Questions


What are examples of a micro business?

Some examples of micro business ideas include freelance writing, editing, art, or design; photography; home improvement services, like plumbing, landscaping, and housekeeping; pet grooming; hairstyling and makeup; making goods to sell on Etsy; food and beverages; car washing; tutoring; coaching; deco


How do I get a loan for my micro business?

Many states have programs that help micro businesses find the right financing. We also recommend speaking with a few banks and credit unions in your area to see which small business financing options they offer. The SBA has a helpful Lender Match website that helps entrepreneurs connect to potential lenders that offer SBA funding.


Do I need insurance for my micro business?

Many entrepreneurs take out business liability insurance to protect themselves and their assets. The most popular type of business insurance is professional liability insurance (also known as errors and omissions insurance). This coverage protects your business from negligence claims, like harm or damage caused by a mistake on your end. We recommend meeting with a business insurance agent. They will provide you with multiple options and guide you toward the right coverages for your specific business.


Can a sole proprietor or solopreneur be a micro business?

Yes! A sole proprietor or solopreneur can run a micro business, but incorporating as an LLC offers extra protection for the business owner’s personal assets.


Do I need an accountant for my micro business?

If owning a business is new to you, an accountant or bookkeeping service may be able to help you navigate state, federal, and self-employment taxes (at least during your first year!).


What is a micro business plan?

A micro business plan is similar to any other business plan. A micro business plan should have an executive summary, your goals for your micro business, a description of your micro business, a market analysis and likely demand, an overview of how your micro business is structured, your online business model, how you will market and sell your offerings, financial projections, and appendices.


What is a micro industry?

Micro industry, micro enterprises, and micro companies are all just other terms for micro businesses.


What is a registered agent?

Whether it's an LLC, S Corp, or C Corp, every formal business entity must have a Registered Agent. A Registered Agent is an individual or business that receives important information, official documents, and correspondence from the state government, federal governments, and other agencies. They forward that information to your micro business so you can respond to it appropriately.